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Income limit for roth IRA - based on current year or past year's income?

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  • Income limit for roth IRA - based on current year or past year's income?

    Hi all,

    Googling hasn't yielded much here so I thought I'd turn to the hivemind.

    I'm transitioning from fellow to faculty July 2021 and am trying to figure out if I can contribute directly to a Roth this year. My salary will be going from about 82K to 157k (putting me around 120k base salary for the year), plus I will have some moonlighting income and an NIH loan repayment award that will also count as income, so I will very likely be right in that phase-out zone of income. I'm a bit confused about whether the Roth IRA contribution limit is based on the prior year of income (i.e. my MAGI from 2020 tax return) or what I expect my MAGI to be this year, which will likely be somewhere in the phase-out zone or higher.

    Thinking this might be the year to have to start doing a backdoor Roth but wondering if I can still do this one last time...

  • #2
    Tax year.
    read: https://forum.whitecoatinvestor.com/...-ira-home-base

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    • #3
      It's based on the tax year for which the contribution was made. The contribution designated for tax year 2021 is based on 2021 income (though you could make this contribution up until 4/15/2022). So you need to start backdoor Roth for 2021 to be safe. It's just an extra conversion step and paperwork.

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